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The rising push to eliminate “financial repression” and increase interest rates should be rejected by anyone who has any sense of social justice. In a nation (and world) that suffers from massive insecurity and marginal living standards, what are we to make of proposals that seeks to distribute public resources not based on need but on the size of one’s bank account? 80% of financial assets are controlled by just 7% in the US. What a mockery to see these same people, while pushing to increase their risk free returns, so righteously condemn the “outrageous” greed and immorality of Goldman Sachs.

I have wondered what the Fed really does ever since I ran across this thing called MMT. But they prolly have a bunch of really smart guys there figuring out how to make all those TARP type loans. I mean we’d all be in the poor house by now, if they hadn’t loaned out that 29 T Randy wrote about. But you say they can’t really help with employment ?

@Jim Thomson, Oh geez, that would mean the interest rate would become even more political than it now is. I can almost hear them now: it’s too low, no, it’s too high. And then there would be a filibuster by the guys who want it the other way. But you may end up hiring even more people than the fed has now figuring this stuff out. A whole new branch of economics and consultanta would emerge. So on second thought ……

The point is that monetary policy was needed under a gold standard in order to ensure that there was sufficient demand for the currency to prevent runs on convertibility.

Now the reason is to influence the economy by influencing the cost of money to borrowers, chiefly investors. And, as Mike Sankowski has observed, a chief investment source is residential RE, so that monetary policy works primarily through housing. The lag time is significant making it a blunt instrument.

Monetary policy under the direction of the cb also results a command system overseen by unaccountable technocrats, which is the anti-thesis of both liberal democracy and market capitalism.

So it is not only obsolete under the current system, it is also ineffective and in conflict with principal institutions of society. When little speaks for and much against, why is this being retained as if it were sacrosanct?